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SIM-only: Handset vendors must react, says O2 CEO

Following the revelation that about a third of O2 UK's customers were now on a SIM-only contract--up from two per cent a year ago--the company has called upon handset manufacturers to add more relevant functionality to new devices.

According to Ronan Dunne, CEO of O2 UK, SIM-only contracts had become one of the company's strongest contributors to its positive Q1 financial results announced last week. However, he maintained that this trend was causing the handset market to polarise, with an increase in customers moving up to smartphones or down to SIM-only, and little activity within mid-range handsets and tariffs.

Dunne commented that people were not saying they aren't going to replace their handsets ever, but just changing the phasing and timing of their purchasing. "There is an opportunity for handset manufacturers here. Unless they make real changes to a handset--i.e., not just changing the screen or the colour--there won't be a real case for people to upgrade."